Tata Steel UK has signed an agreement to sell its speciality steel unit to Liberty House Group for £100 million.
In a notification to the stock exchanges, Tata Steel said the agreement covered several South Yorkshire-based assets. These included electric arc steelworks and a bar mill at Rotherham, a steel purifying facility in Stockbridge and a mill in Brinsworth, along with service centres in several parts of the world, including China. The unit employs 1,700 people and caters to the aerospace, automotive and oil & gas industries.
“We will be handing over a business which has been transformed, following difficult decisions, to restructure and refocus on higher-value markets. Employees, trade unions and management teams have worked hard at the speciality unit to improve performance,” Bimlendra Jha, chief executive officer at Tata Steel UK was quoted.
Tata Steel UK is currently consulting with its employees on a number of proposals on the way ahead for a more sustainable future. It is also in discussion with the British Steel Pension Scheme trustees and the pensions regulator.
Tata Steel said it had so far invested £1.5 billion in its UK business, including £85 mn this year, on a range of sustenance and improvement schemes.
The company’s strip products business will continue to employ 9,000 people in the UK, manufacturing advanced products for sectors such as the automotive industry, it said.
Liberty Group had signed a letter of intent for Tata Steel’s loss-making speciality steel unit in December. It has plans to expand the unit and been positive on the buyout as it is a part of the profit-making steel recycling industry.
Since Tata Steel has made the Corus buyout in 2007, the firm has been witnessing heavy financial strain.
Due to this, its India operations, which had been doing considerably well, felt the heat as it had to divert its operating earnings to service the debt of loss-making European operations.